Monday, June 30, 2008

Summit County Real Estate Reports through May 2008

It is definitely becoming a buyer’s market in Summit County.  As of this writing, there are 1,459 residential units on the market in Summit County.  But the good news is that sales prices are still increasing over last year.

 Land Title Guarantee Company provides me with a monthly report detailing transactions within Summit County.  The number of residential improved unit transactions year-to-date through May 2008 was 620 transactions with a total Dollar Volume of $348,371,800.  This is down significantly from May 2007 Year to Date which showed 891 transactions with a total Dollar volume of $456,564,400.  However, the news isn’t all bad.  Through May 2007 YTD, the Average Sales Price for Summit County was $512,418.  Through May 2008 YTD, The Average Sales Price for Summit County was $561,890 – a 9.7% increase over 2007.

 What does this mean for sellers?  While prices are holding strong, someone who wants to sell their property this summer needs to be smart about setting their list price.  With nearly 1,500 properties on the market, this is no time to be setting records.  Work closely with your realtor to get the most money for your home without over-pricing it.  Many factors need to be considered:  1.  How quickly do you need to sell your home?  2.  What condition is your home in?  3.  How much updating will a buyer need to do – and how does that compare with other homes on the market in your area?  And always remember that if the buyer is obtaining a loan, the home will need to appraise.  With stricter mortgage guidelines and a closer eye on appraisals, you may not see the generosity in market value once given by appraisers. 

 As a buyer, do not expect to see the “screaming deals” that can be found in other parts of the country.  Remember, we are still a luxury market.  However, now is a good time to get out there and start making offers on houses.  Sellers may be willing to negotiate more than they have in the past.

 

Monday, June 23, 2008

Why Fed Rate Cuts do not equal lower Mortgage Rates

The number of sales in Summit County has definitely slowed down.  There could be a number of factors effecting this which I will discuss in future days.  However, I do believe that one of the factors can be mortgage rates.  While mortgage rates continue to be at historical lows, our memories are short when it comes to settling on a mortgage for our new home purchase.  I remember how thrilled I was in 1991 when my mortgage rate was in the single digits.  And now I wouldn't even consider a mortgage over 7%.  Today, while the Fed has continued to cut rates, we have seen an increase in mortgage rates.  Why?

I have worked with Mountain Equity Mortgage here in Summit County for the past 2 1/2 years.  They are an excellent mortgage broker who works with each buyer to find the mortgage that best fits the buyer's needs.  They publish a bi-monthly newsletter, and with their permission, I am reprinting an article from their last newsletter explaining why cuts in the Fed Rate do not necessarily equal lower Mortgage Rates.  You can contact Mountain Equity Mortgage at 970-513-0934 or visit them at their website at www.mtnequity.com

The Federal Reserve has been on a rate cutting spree once more.  Many mortgage applicants are calling their mortgage representative and expecting a lower interest rate.  Others who have been waiting to refinance are puzzled as to why mortgage rates have not moved lower during the recent six Fed rate cuts.  This is difficult to explain to consumers who have watched a 3.0% reduction by the Fed with very little benefit in mortgage rates.

Is a Fed rate cut really good news for mortgage rates?  The facts may be surprising.  The Fed can only control the Discount Rate and the Fed Funds Rate.  This is very different from mortgage rates.  A mortgage rate can be in effect for 30-years while a rate set by the Fed can change from one day to another.

It is often said history repeats itself.  And if history is any teacher, we can learn from what happened to mortgage rates the last time the Federal Reserve was in a rate-cutting cycle.

The last time the Fed was in a lengthy rate cutting cycle was back in 2001 from January 3, 2001 to December 11, 2001.  In the span of 11 months, they cut the Fed Funds rate 11 times with eight of those cuts by 50bp.  This resulted in a total of 475bp or 4.75% in short-term interest rate cuts taking the Fed Funds Rate from 6.0% down to 1.75%.  Now most uninformed people would naturally think because the Fed cut rates by so much during this time that mortgage rates would follow suit and trend lower as well.  Not so.  Mortgage rates actually moved higher during this time of significant rate cuts because inflation, the arch enemy of bonds, gradually rose.

Now let's take a look at what happened with the Fed's most recent cutting cycle, the first since 2001.  On September 18, 2007 the Fed cut the Fed Funds Rate by 50bp.  The mortgage bond market briefly enjoyed a "knee-jerk" reaction to the Fed move by closing higher that day, but lost 140bp over the following two sessions.  Then on October 31, 2007 the Fed lowered the Fed Funds rate by 25bp.  The mortgage bond market responded by losing 78bp over the following five trading days.  On December 11, 2007 the Fed once again lowered rates by 25 bp and the mortgage bond market lost 88bp in the next three days.  So far this year, the Fed delivered a surprise 75bp rate cut on January 22, 2008 and mortgage bonds lost a whopping 144bp in just 2 days.  Eight days later and as widely expected, the Fed cut rates by 50bp.  Within 13 days from that 50bp cut, mortgage bonds lost 269bp.  On March 18, 2008 the Fed cut by 75bp and mortgage bonds lost 113bp in 6 days and 214bp in 22 days.

 

Wednesday, June 18, 2008

Preparing your Summit County Home to list

With more homes on the market this summer, getting your home into tip-top shape prior to listing can help your home not only be more impressive during the showings, but can also eliminate items that will inevitably show up on the inspection notice.  Tiger Home & Building Inspections recently sent me a list of the most common inspection findings.  Before selling your Summit County home, take the time to address these issues:

1. Install all window screens.
2. Replace fogged or stained window thermopanes; replace broken glass panes.
3. Clean debris out of gutters; repair or replace cracked or broken gutters and downspouts; install downspout extensions.
4. Check for proper drainage; re-grade soil around the foundation to keep water away from the house.
5. Replace dirty filters in the heating systems.
6. Repair leaky outside, bathroom, and kitchen faucets.
7. Repair leaky sinks and tub drains.
8. Secure toilets to the floor.
9. Replace bathroom grout and caulk where necessary.
10. Tighten loose door knobs and cabinet hardware.
11. Replace burned-out light bulbs.
12. Re-secure loose outlets and switches; install missing switch, outlet, and junction box covers.
13. Install GFCI (Ground Fault Circuit Interrupters) electrical outlets in all “wet” areas (kitchen countertops, bathrooms, crawl spaces, basements, garages, and outside.)
14. Install smoke detectors (at least one on each level).

 

Monday, June 2, 2008

What's Happening in Summit County Real Estate?

I get asked this question frequently by locals and second homeowners in Summit County.  At this time of year, this can be a difficult question to answer.  First of all, we are in what is typically a slow season for real estate sales in Summit County.  We just finished May – mud season!  The people who drive our market, the 2^nd homeowners, are not in the county shopping for a home.  This fact alone has a profound effect on what is happening in our market.  As the summer season approaches, we will begin to see more 2^nd home shoppers which will increase the demand in our market.

Secondly, we are seeing a shift in the supply & demand as compared to last year.  Last year we had buyers waiting around for the property they wanted – often making offers sight-unseen.  No one was selling and everyone wanted to buy.  Home prices skyrocketed because of that natural phenomenon.  However, supply is increasing this year.  Currently, there are 1,207 active properties on the market.  We had a difficult time getting over 1,000 last year – even in the high season of July – September! 

Are we falling into the same real estate down-turn that the rest of the country is experiencing?  In my opinion, no.  Our average sales price continues to rise.  We are a luxury market with a finite amount of land that can be developed.  While prices may level off a bit during the next few months, and listings may stay on the market more than 30 days, I do not expect to see a severe down-turn.  Now is an excellent time to invest in Summit County property.  There may be more bargaining power for the buyer than what has been available to them in the past few years.  But don’t expect to come out to Summit County and find the deal of the century.  At this time, they still don’t exist. 

 As always, if you would like to explore the Summit County real estate market, please give me a call.  I would be happy to assist you in finding your perfect mountain dream home.

 

Wednesday, May 21, 2008

Is Summit County Real Estate Affordable?

The Summit Daily News printed an article this week entitled, “Is affordable housing really ‘affordable’?”  You can read this article at http://summitdaily.com/article/20080519/NEWS/554462918.  The key word that I picked out from this article is “attainable”.  It is laughable to consider a $400,000 home “affordable”…especially in an area where average incomes do not even come close to qualifying for one of these affordable homes.  However, local lenders do help to make these homes attainable.

When we moved here 9 years ago, we left a beautiful home in West Des Moines, Iowa.  We ended up buying a home ½ the size for twice the cost.  Was it worth it?  You bet!  I will be the first to tell you that I didn’t move to Summit County, Colorado to live in my dream home.  I moved to Summit County, Colorado to live my dream.  For a family that enjoys hiking, biking, skiing, fishing & hunting, there is not a better place to call home!  Yes, we paid a lot for our home.  But in the 9 years we have lived in our Silverthorne home, our property value has more than doubled.  It is not an ideal home.  Only 1 living area (we are hoping to add a family room this summer), and 4 small bedrooms with 2 baths.  But our time is spent enjoying the outdoors!  We have a very small yard, but if I walk less than ½ mile, I’m in the middle of the National Forest.

With the rising cost of real estate in Summit County, Colorado, you may wonder if it makes sense to invest in it.  That is a decision that only you can make…but let me offer up this one piece of information:  In 1988, the average price of a residential property in Summit County was $99,749.  In 2007, the average price of residential property in Summit County was $528,343…a 430% increase in property value!

 

Monday, May 12, 2008

Summit County Real Estate - Prices remain strong!

While the number of sales in Summit County are fewer than last year at this time, the price of a Single Family Home continues to rise.  The Average Price of a Single Family Home in Summit County in 2007 was $798,889.  For the first 2 months of 2008, the average price of a single family home was $1,008,065...breaking the $1M mark!  The cost of Multi-family units has decreased a bit from $406,529 average price in 2007 to $401,334 in the first 2 months of 2008.  Summit County remains a strong real estate market.  If you are interested in purchasing Summit County Real Estate, or would like to sell a property that you already own, please call me today!!

 

Wednesday, March 26, 2008

Consider Summit County Real Estate for your retirement fund.

In the March 9, 2008 Denver Post, an article by Tom LaRocque discusses the idea that real estate can be a good IRA investment. You can read the entire article at http://www.denverpost.com/search/ci_8498572.

This concept is not new to IRA’s, but it is not a common practice. However, in today’s economy, many people may be looking to other avenues to stabilize their portfolio. I encourage you to read this article to see if it might be right for you.

Summit County may be the perfect place to invest in real estate with your IRA. Over the last 20 years, Summit County Colorado real estate has seen tremendous growth. The average residential price for property in Summit County in 1988 was $99,749. The average residential price for property in Summit County in 2007 was $528,343. This is a 430% increase in 20 years! Quite the return on your money. Not to mention the income that can be realized by your IRA through rentals.

Call me today if you would like consider investing in Summit County real estate!